The causes of the Asian currency crisis: empirical observations

This paper examines statistically and systematically the five causes of the Asian currency crisis exposed by the IMF, using a probit model. The paper shows that the two causes of the IMF are persuasive. The Asian currency cri sis tends to occur when the ratio of foreign reserve to total debt is low a nd the progress of financial deregulation without regularity is great. The paper also shows that the general causes found by previous researches never fit the case of this crisis, but that the trade linkage of each country to the first victim country helps explain the causes of this crisis. (C) 2000 Elsevier Science B.V. All rights reserved. JEL classification: F21; F31; F 41.